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All options open for Sullom Voe port

A ship to ship transfer at Sullom Voe. Photo John Bateson

THE SALE of the port of Sullom Voe to a private company will remain an option after a tetchy debate inside Shetland Islands Council this week.

Councillors are examining the future of the port that has brought hundreds of millions of pounds into council coffers over the past 30 years, but whose golden days are over.

Uncertainty about its future viability is growing after BP ‘s shock decision last week that its Schiehallion production west of Shetland will bypass Sullom Voe.

This follows Fairfield Energy’s decision in May to decommission its Dunlin field, which feeds Sullom Voe via the Brent pipeline.

Some industry chiefs fear a “domino effect” that could make the Brent pipeline unviable.

Price Waterhouse Coopers (PwC), who are carrying out the SIC study, estimate the port will generate a net income of £338 million for the council until 2035.

Harbour board chairwoman Andrea Manson is dead set against selling Sullom Voe port to a private operator.

However if the council retains control of the port after that it will have to subsidise it to the tune of £180 million until 2050, they say.

Councillors agree that subsidy is not an option and are calling on the oil industry to open up about their plans for Shetland.

In response, terminal operators BP insist their commitment to Sullom Voe remains as strong as ever with the multi billion investment in the Clair Ridge project.

PwC propose four options for the port:

• continuing council ownership with improved efficiency and activity;
• creating an arms length public body to run it more effectively and efficiently;
• contracting a private port operator to run it commercially; or
• selling off a stake or the whole of the port to a private operator.

PwC say all the options have potential, but Shetland North councillors Andrea Manson and Alastair Cooper want the sell off option removed.

SIC leader Gary Robinson believes all options should be left on the table.

After a heated debate during which Cooper described council leader Gary Robinson as “ignorant”, the pair lost the vote convincingly by 14:4.

Afterwards Manson said she did not believe a sell off would ever be seriously considered, and thought the idea should have been dumped altogether by this stage.

“We have to be seen to be working shoulder to shoulder with the oil industry to be encouraging more business for the port, rather than having the threat of selling it to a third party hanging over everyone’s head,” she said.

Robinson retorted that there was such a degree of uncertainty over the port’s future that everything had to be considered.

“If the port can’t be self sustaining then we have to consider that option (of selling it).”

Both councillors agreed that the industry itself should be more open about their plans for the future, after the SIC was stung by being excluded from any discussion about the future of Schiehallion oil, which has provided 40 per cent of the port’s income.

In two weeks the council will start negotiating next years harbour dues for the port, which will no doubt rise to take into account the loss of Schiehallion business.

The £90,000 cost of the PwC study, which is due to be completed in the second half of next year, will also be factored in to cover its cost over the next two years.

Meanwhile the oil industry has admitted it was caught off guard by the sheer cost and complexity of developing oil and gas fields west of Shetland.

Total’s outgoing UK managing director Phillipe Guys said recently that in hindsight they would have scaled down the size of their new gas plant that is on the verge of completion at Sullom Voe.

He described the entire Laggan-Tormore development that will feed the gas plant as “a masterpiece of engineering”, but admitted “we would probably do things differently right now in the sense of maybe not building the plant as big”.

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